March 2, 2010

The legality of Mike Bloomberg’s $1.2 million in personal contributions to the Independence Party immediately before last year’s mayoral election gets murkier and murkier.

I wrote a blog item last week that demonstrated three ways the contributions may have violated state law, exposing Bloomberg to multiple possible misdemeanor charges. Marty Connor, the former Democratic senate leader and an accomplished election attorney who once represented Independence Party gubernatorial candidate Tom Golisano, contacted me to say I’d missed two. Connor was defeated in 2008 by a Democrat backed by Bloomberg, Dan Squadron, so take his opinion with a cupboard full of salt. But I tested Connor’s opinion out with Laurence Laufer, onetime counsel to the city’s Campaign Finance Board. Laufer represented Bloomberg opponent Bill Thompson last year, but no longer does. Laufer largely agreed.

Manhattan District Attorney Cy Vance is probing the secret last-minute funding of the party by Bloomberg, which was done from his personal account, rather than his campaign committee, to sidestep disclosure and oversight requirements under the city’s campaign finance laws.

While there are no limits on what a candidate can spend on his own behalf, as Bloomberg has demonstrated to an historic degree, the maximum that any individual can give, under New York state law, to aid all candidates he wants to support is $150,000 a year. The only way to avoid that ceiling is to give to a party housekeeping account, which covers the nuts and bolts of everyday operation but isn’t supposed to be used for individual campaigns.

Bloomberg’s money was given to the Independence Party (IP) housekeeping account in two $600,000 donations to avoid both the $94,000 ceiling on individual contributions to a party’s campaign committee and the $150,000 aggregate limit on what an individual can give to all other candidates. Bloomberg’s campaign guru Howard Wolfson and his lawyer Ken Gross have claimed that the funds were used to cover election-day costs like poll watchers, drivers and cellphones, which could potentially violate the non-campaign exception to the $94,000 ceiling carved out for housekeeping committees.

Gross, who refused to tell the Voice if he was representing Bloomberg in the ongoing Vance probe, says the expenditures were not just to aid Bloomberg, but for “whatever candidates the Independence Party had on the ballot.”

If so, says Connor, “then Michael Bloomberg has personally violated the New York State Election Law as a Class A misdemeanor.” Connor insists that the $150,000 limit kicks in if the money directly benefited the campaigns of candidates other than himself.

Laufer reads the statutes the same way, with one exception. He says transfers of money from a candidate to a party are not covered by the $150,000 limit. While he acknowledges that the two Bloomberg payments to the IP are listed in the party filings as “contributions,” not transfers, he says the party “can always amend its filings.” If the IP changed the reporting of the money to a transfer, it would not be a violation of this law, Laufer argues, though it might still violate the sections he cited in my prior blog item.

Gross was Johnny one-note. All he would say was that Connor was “wrong,” and that these were not only “proper” housekeeping expenditures, but “typical” such expenses. He contended that “housekeeping expenditures can be made to benefit all candidates” backed by a party, so long as they don’t “benefit just a single candidate.” He would not supply any precedent for that interpretation.

Asked why the mayor chose to make these contributions personally rather than through his campaign committee (which would have avoided all of the legal issues the DA is now probing), he declined to answer. Pressed repeatedly to explain why state law sets two entirely different standards for housekeeping and campaign committees if housekeeping committees are free to make campaign-related expenditures and, unlike campaign committees, not disclose them until months after the campaign, he said it wasn’t his business to explain “why the law says what it does.”

Connor and Laufer are in complete agreement on a second violation, and Gross wouldn’t discuss it. It involves filing deadlines.

Housekeeping accounts, precisely because they are not supposed to be used to fund campaigns, are only required to file twice a year. That’s why the Bloomberg donations–given on October 30 and November 2–did not become known until the IP filed its semi-annual statement with the Board of Elections on January 15. Connor and Laufer believe that since the party was using these funds for campaign purposes–for Bloomberg and other candidates–it was obligated by law to report receiving the contributions either in the 10-day pre-election filing or the 32-day post election filing.

It’s arguable that the November 2 contribution came too late–the day before the election–to be reported in the pre-election filing, but there was likely enough time to report the first $600,000. In any event, both should have appeared in the report that followed the election immediately, not delayed for two and a half months.

The failure to report the first contribution before the election is another inference, among many, of the party and Bloomberg’s witting scheme to end-run the statutes. Connor, who was Vance’s election lawyer last year, even argues that all of these inferences may “implicate” Bloomberg “in a conspiracy to create a false filing, which is a felony.” However, since it was the party, not Bloomberg, that did the filing, it would be extremely difficult to make the mayor legally responsible for a submission the party made.

Blair Horner, the New York Public Interest Group advocate in Albany and ex aide to Andrew Cuomo in the attorney general’s office, said that “if the funds were used in the general election,” they should have been reported in the filing” done immediately after the election. He also says that housekeeping funds “are not supposed to be used for election activities,” though he believes that “the people who are in the crosshairs are the people at the IP that spent the money in a way that appears to be inappropriate.” Of course, judging from the statements of Wolfson and Gross, the IP spent it for precisely the same purpose that prompted Bloomberg to donate it.

Newsday reported that Bloomberg’s $1.2 million contribution to the IP for the state senate races in 2008 was also a possible violation of some of the same statutes I’ve cited in these two blog pieces, suggesting that Bloomberg and the party have been systematically evading these limitations for campaign purposes for years. Vance is the first law enforcement official to actually take a close look.